It is extremely challenging to run a child care business year round. If you have often thought about opening your own child care business but are afraid to commit to year-long care, maybe you should consider opening a child care business for the summer months only. This article looks at the pros and cons of this option, as well as possible scenarios for what this summer child care business may look like.
If you have your own school age children that you are home with during the summer, running a summer home child care can be a great way to make some money and entertain your own children at the same time. There is a huge demand for summer time care for school age children whose parents still have to work over the summer. These kids aren’t old enough to stay home alone, but they aren’t toddlers either who need constant monitoring and care. They are usually a lot of fun and very creative. Most kids of this age love to be outside and active. But they also enjoy quieting down with a movie or maybe even doing some reading on their own. They can pretty much take care of themselves when it comes to basic care (bathroom, eating, drinks, etc.). Parents are usually willing to pay well for keeping their kids safe and entertained. Nothing is worse than bored kids, because they get into trouble. Plus parents appreciate the convenience offered by a home daycare and the quality of care offered. This is a way to allow you to earn that extra money while not having to commit to caring for other children year round.
There are some negatives to this though. First, you really do need to have a license to operate a home child care. Getting a license can be a pain, but it covers you in case of problems. The older children that you would be caring for may not require as much monitoring, but they do require a different kind of attention. Older children tend to get into arguments more frequently about how things should be done. You may be playing referee a lot! Also, they have developed an attitude by this age, and it may show through! You will need to be very firm and fair with your rules. Be firm from the beginning and you will make things far easier on yourself and the children you care for. Since these children are older, they tend to eat more. You can either charge a little more per day to compensate for meal costs, or you can ask parents to send meals for their children. Personally, I find the first option to be easier. They will also need to keep hydrated in the hot weather. So you will be dishing out a lot of water! Finally, you will need to be able to keep these kids entertained. Most kids this age don’t entertain themselves very well. Either they are constantly whining about being bored or else they are making unhealthy choices about how to spend their time. You will have to be very creative to keep the boredom and lethargy at bay! The other thing to consider is that you will not have the freedom to go on vacation or even take day trips with your family. If you are committing to caring for other children for the summer, you really need to make yourself available to these families for the whole summer. But it doesn’t have to be boring! See below for how to have a great summer!
OK, so you’ve decided that operating a summertime childcare is right for you. How do you set it up? Well, if you haven’t already obtained your child care license, that is your first step. Call your local licensing bureau or a local community college to find out how to get started. Once you have your license, you will want to designate some areas of your home for your business. You probably don’t want the kids wandering into all areas of your home, so decide where they can be and set up those areas to be conducive to children. I recommend setting up a reading area with comfy pillows or bean bags and plenty of books at all reading levels. Have a craft area where they can color, make things out of yarn or Popsicle sticks, cut, glue, and maybe even paint. Set up a dress up clothes area where they can dress up and pretend to be whomever they choose. Also set up an area with basic toys such as cars, dolls, blocks, animals, etc. Finally, set up a game corner with lots of different board games and card games. Despite the warm weather, you are going to have times where you are indoors, and the children need to have lots of choices of appropriate activities. You will also need to have an outdoor play area for the kids. Ideally this would include swings, a slide, climbing equipment, a sandbox, and some room to play sports. Obviously you may not be able to include all of these areas. You absolutely need an area for sports though. These older kids love to organize games of kickball, dodge ball, baseball, etc. and they need room to do this.
Once you have your child care business arranged, you are ready to plan a schedule for the summer. I highly recommend planning your schedule ahead of time. That way you can make sure you are ready for everything, and parents can look at your schedule to see if it will meet their child’s needs. What should your schedule include? The answer is A LOT! The more activities you plan, the easier your summer will be. Having said this, don’t schedule every minute of every day! Children also need the opportunity to choose activities for themselves! My recommendation is to try to plan at least three scheduled activities a week. They do not all have to be field trips! As a matter of fact, unless you have a large car with a lot of seat belts, you may not be able to take field trips at all! I do recommend field trips if you can get help transporting the kids. My suggestions are to go to the zoo, a museum, historical buildings, fishing, hiking, to the park, etc. I don’t recommend taking them to an amusement park or to the pool unless you have at least a couple of other adults along to help you keep an eye on everyone. Let parents know about field trips well in advance. Some of them may want to take some time off and come along. Of course, if a parent comes along you wouldn’t be able to charge the parent for that day of childcare! Another consideration for field trips is lunch and snacks. You will either need to pack a lunch for each child as well as some snacks, or you will have to ask parents to send money for lunch. Going out to eat can be fun but tricky. Ordering for seven or eight kids is a chore. Also, some parents may not have the extra money for meals. You will need to get permission slips for each child for the trip and you will need to bring along emergency contact information as well. You will also probably need to bring along sunscreen and water bottles for everyone.
Besides field trips, there are a lot of other fun activities to do at your house. You can plan special craft activities, cooking activities, theme days, party days, treasure hunts, game days, etc. As I said, planning about 3 activities a week should be enough. For craft activities, come up with crafts that the kids won’t think of on their own. Make sure you have the right supplies! Consider painting rocks for pets, making God’s Eyes, building bird houses, building a maze, or other fun activities. For cooking activities, you will want to choose recipes that will allow all of the kids to get involved. Consider allowing the kids to help you make lunch. They can plan the menu and help with the preparation and cooking. Invest in a good children’s cookbook to give you more ideas. Theme days are great fun. Choose a theme for the day such as sports day or beach day and plan activities around those themes. For sports day make some fun relays and ball games. Encourage good sportsmanship in all you do. For beach day fill a small wading pool. Lay out beach towels, beach balls, and water toys and enjoy a day in the sun and surf. Be creative! For party days, find reasons to celebrate! Do any of the children you care for have birthdays during the summer? Plan a birthday party! You can have a 4th of July bash! Look at the calendar and find obscure days to celebrate! Treasure hunts are great fun! Make a map and have the kids work together to find clues to lead them to the treasure. For game days, have each child bring in a favorite game and spend time learning to play each game. Planning fun activities doesn’t have to be costly. Use things you have laying around, or ask for donations from parents.
I highly recommend planning some quiet time into each day as well. Whether or not they realize it, these kids need some down time. Require them to do some reading each day. Have them write their letters or some sentences. Let them look at picture books. Play a movie. Put on some quiet music and have them draw pictures. You only need about an hour of quiet time a day. All of this combined can make for a great summer!
Running a summertime child care can be profitable and rewarding. Do some planning now to avoid problems later on. Spend some time coming up with fun activities, and you and the children you care for can have a great summer!
Thursday, May 29, 2008
Wednesday, May 28, 2008
Child Care and Summertime
Hello Everyone! Sorry I have been out of touch for awhile! I am back now and you can once again expect regular posts. An issue that is on a lot of people's minds right now, is child care in the summertime. There are several issues that face both parents and child care providers when faced with summertime. Let's look at the parent issues first.
Parents either have their children in care year round, have them in care only during the school year, or have them in care only during school vacations. Parents that have school age children who are now out of school for the summertime (or soon will be!) face the unique challenge of what to do with their kids over the summer. Kids under the age of about 12 or 13 shouldn't be left alone all day every day during the summer while parents work. But it can be difficult to find care for the children over the summer. Many churches and daycare centers offer special summer programs that are made for a little bit older children and include frequent field trips and outdoor activities. These are great for many families, but they can also be very costly. Because these programs include at least weekly field trips, they usually run families at least $300 per month for one child. Sometimes parents can find a home daycare that has summertime openings. These are usually less costly options but many times they aren't as activity packed either.
For child care providers this provides a unique opportunity to make some extra money over the summer. You can establish a child care that will provide summertime care for school age children with lots of fun activities at a reasonable cost. For more ideas on what to include in such a situation, see my new article on ezinearticles.com entitled Running a Summertime Home Childcare.
There are two dilemmas that childcare providers face during the summer months. The first is what to do with the extra kids you inherit during the summer months. More than likely you have your own school age children that are home during the summer. This adds extra children into your count. You also may have children that you normally have for before and after school care that suddenly need part or full time care during the summer. Again, your number ratio is affected by these kids. So, what do you do? First, I would contact your licensing bureau and explain your situation. Most bureaus are understanding about these situations and will either grant you leniency on your numbers for the summer months or will have some suggestions on how to handle the situation. Also, you can speak with the parents and let them know about your dilemma. Some parents may be able to alter their summer work schedule to help you out. The second dilemma you face is what to do to keep all of those kids active over the summer. Summer care needs to look a little different than care during the rest of the year. Plan outdoor time at least twice a day. Schedule some extra fun activities. Plan a couple of field trips. Again, for a more complete list see the article referenced above.
All in all summertime offers unique opportunities for child care providers to broadent their horizons and expand their business. Take advantage of it! For some fun ways to spend your time, see the list of my favorite child care products above this posting! Happy summer!
Parents either have their children in care year round, have them in care only during the school year, or have them in care only during school vacations. Parents that have school age children who are now out of school for the summertime (or soon will be!) face the unique challenge of what to do with their kids over the summer. Kids under the age of about 12 or 13 shouldn't be left alone all day every day during the summer while parents work. But it can be difficult to find care for the children over the summer. Many churches and daycare centers offer special summer programs that are made for a little bit older children and include frequent field trips and outdoor activities. These are great for many families, but they can also be very costly. Because these programs include at least weekly field trips, they usually run families at least $300 per month for one child. Sometimes parents can find a home daycare that has summertime openings. These are usually less costly options but many times they aren't as activity packed either.
For child care providers this provides a unique opportunity to make some extra money over the summer. You can establish a child care that will provide summertime care for school age children with lots of fun activities at a reasonable cost. For more ideas on what to include in such a situation, see my new article on ezinearticles.com entitled Running a Summertime Home Childcare.
There are two dilemmas that childcare providers face during the summer months. The first is what to do with the extra kids you inherit during the summer months. More than likely you have your own school age children that are home during the summer. This adds extra children into your count. You also may have children that you normally have for before and after school care that suddenly need part or full time care during the summer. Again, your number ratio is affected by these kids. So, what do you do? First, I would contact your licensing bureau and explain your situation. Most bureaus are understanding about these situations and will either grant you leniency on your numbers for the summer months or will have some suggestions on how to handle the situation. Also, you can speak with the parents and let them know about your dilemma. Some parents may be able to alter their summer work schedule to help you out. The second dilemma you face is what to do to keep all of those kids active over the summer. Summer care needs to look a little different than care during the rest of the year. Plan outdoor time at least twice a day. Schedule some extra fun activities. Plan a couple of field trips. Again, for a more complete list see the article referenced above.
All in all summertime offers unique opportunities for child care providers to broadent their horizons and expand their business. Take advantage of it! For some fun ways to spend your time, see the list of my favorite child care products above this posting! Happy summer!
Tuesday, April 8, 2008
Conducting Parent Interviews is Essential for Child Care Providers
As a child care provider you will spend your day caring for other people’s children. This may sound ideal, since you get to send them home to their parents at the end of each day. However, many new providers are so eager to bring in new families that they don’t take the time to do proper interviews before signing on new clients. This can lead to a multitude of problems down the road that can be avoided with a sit down interview prior to contract signing and a trial period with each new family.
It may surprise you to find out that many parents searching for care for their children don’t request an interview before placing their children in care. There are a few reasons why this may happen. First, in some areas child care services are very scarce and parents are willing to take almost anything that comes along so that they can work and provide for their family. They assume that if other people are bringing their children to the provider for care then the provider must be fine. Secondly, parents are sometimes in a huge hurry to find child care for their children because they are starting a new job or because other child care arrangements are no longer available. So again, they take the first opening they find. Third, parents may know other families that bring their children to that particular facility and are happy there, so they assume that their children will be happy there as well. This is a case of a family choosing a provider based solely on reputation. Throughout my nine years of being a child care provider, I had several instances in which parents called up and were ready to bring their children without ever visiting my home or meeting me! Since this does happen, it is the responsibility of the provider to insist on an interview before agreeing to provide care for a family.
Why is an interview so important? There are several reasons. First, you don’t know this family and they don’t know you. The parents may sound wonderful on the phone, but you may meet them and find out that your phone impression was way off base. As the old adage says, first impressions mean a lot. You need to physically SEE these people before you agree to care for their children. Remember, you may spend the majority of your day with their children, but you will have to deal with the parents at least twice a day as well. Also, you absolutely must meet the children before you agree to care for them. Surprisingly, you can often get an accurate read on a child’s behavior and temperament in that first interview. Some children may arrive and be shy and quiet, but after a few minutes they will start to interact with other children and you should be able to get a good read on their behavior. It is true that some personalities clash, and you need to make sure that you can get along with the children you care for. One word of caution: even if you do know a family from the community, you still should meet with them formally as a child care provider before agreeing to care for their children. You never know what you may learn about a family in an interview. The second reason that an interview is necessary is to show your facility to the family. You need to make sure that they are ok with the way you have your facility set up before they bring their children to you. Third, you need to conduct an interview to review your contract and other required forms with the family. Your contract is your guide book on how your facility is run. You should sit down and discuss each contract item with the parents and also discuss each other required document so that there are no surprises. Legally, it is extremely important that you fully explain each document to make sure that parents understand what they are signing. Just like any other signed document, your child care contract and supporting paperwork are legally binding documents once they are signed. An interview can help to ensure that this is a good child care match for everyone.
So, how do you conduct an interview? It doesn’t have to be anything fancy or formal. I used to think that interviews with new families should be done after daycare hours. If that is the only time it will work, fine. However, I now feel that it is best to have the interviews during the day when you have other children present, whether your own or someone else’s. Choose a time of your work day when the children will be occupied and not need too much of your attention. Avoid meal or snack times, craft times, and nap time. You want a time when the new children can play and interact with the other children and you can observe while talking to the parents. I also recommend that you ask both parents to attend the interview if both parents will be involved in drop off and pick up. That way there are no surprises. I usually start the interview with a tour of the facility- the entire facility. That means that even if there are areas of your home that will never be used for child care, you still should show these areas to the parents. You want them to feel comfortable that your entire home is a safe, clean, and nurturing environment for their children. Specifically point out features in the areas used for child care, such as the eating area, the bathroom, nap areas, etc. Once the tour is over, take a few minutes to get the new children started playing with the others and sit down nearby with the parents. Start by going over the contract, since this is what brings out and answers the most questions. Discuss rates, hours of operation, schedules, meals, drop off and pick up, everything! Also review all other forms. Check to see if they have questions. Make sure you ask them about their typical drop off and pick up times so you can make sure they fit with your schedule. Also, be sure to provide the parents with a form to fill out about their child. Include areas for sleep habits, food or other allergies, medications needed, previous daycare experiences, fears, likes and dislikes, anything you need to know about this child to provide the best quality care. I would recommend spending at least 30 minutes talking with the parents while observing the kids playing. If you see behavior issues in this time, discuss them right away. If the parents are ready to sign the documents when you are done talking and you also think this would be a good match, make sure you reiterate that all children are accepted into care on a two (or four) week trial basis. That means that if either party is unhappy with the arrangement in that time they can cancel immediately without penalty. This gives everyone a little breathing room.
Being a child care provider is the ultimate in customer service positions. You spend long hours each day dealing with children and the people who care the most about them, their parents. You need to conduct an initial interview for the sake of everyone involved. Better to be safe than sorry!
It may surprise you to find out that many parents searching for care for their children don’t request an interview before placing their children in care. There are a few reasons why this may happen. First, in some areas child care services are very scarce and parents are willing to take almost anything that comes along so that they can work and provide for their family. They assume that if other people are bringing their children to the provider for care then the provider must be fine. Secondly, parents are sometimes in a huge hurry to find child care for their children because they are starting a new job or because other child care arrangements are no longer available. So again, they take the first opening they find. Third, parents may know other families that bring their children to that particular facility and are happy there, so they assume that their children will be happy there as well. This is a case of a family choosing a provider based solely on reputation. Throughout my nine years of being a child care provider, I had several instances in which parents called up and were ready to bring their children without ever visiting my home or meeting me! Since this does happen, it is the responsibility of the provider to insist on an interview before agreeing to provide care for a family.
Why is an interview so important? There are several reasons. First, you don’t know this family and they don’t know you. The parents may sound wonderful on the phone, but you may meet them and find out that your phone impression was way off base. As the old adage says, first impressions mean a lot. You need to physically SEE these people before you agree to care for their children. Remember, you may spend the majority of your day with their children, but you will have to deal with the parents at least twice a day as well. Also, you absolutely must meet the children before you agree to care for them. Surprisingly, you can often get an accurate read on a child’s behavior and temperament in that first interview. Some children may arrive and be shy and quiet, but after a few minutes they will start to interact with other children and you should be able to get a good read on their behavior. It is true that some personalities clash, and you need to make sure that you can get along with the children you care for. One word of caution: even if you do know a family from the community, you still should meet with them formally as a child care provider before agreeing to care for their children. You never know what you may learn about a family in an interview. The second reason that an interview is necessary is to show your facility to the family. You need to make sure that they are ok with the way you have your facility set up before they bring their children to you. Third, you need to conduct an interview to review your contract and other required forms with the family. Your contract is your guide book on how your facility is run. You should sit down and discuss each contract item with the parents and also discuss each other required document so that there are no surprises. Legally, it is extremely important that you fully explain each document to make sure that parents understand what they are signing. Just like any other signed document, your child care contract and supporting paperwork are legally binding documents once they are signed. An interview can help to ensure that this is a good child care match for everyone.
So, how do you conduct an interview? It doesn’t have to be anything fancy or formal. I used to think that interviews with new families should be done after daycare hours. If that is the only time it will work, fine. However, I now feel that it is best to have the interviews during the day when you have other children present, whether your own or someone else’s. Choose a time of your work day when the children will be occupied and not need too much of your attention. Avoid meal or snack times, craft times, and nap time. You want a time when the new children can play and interact with the other children and you can observe while talking to the parents. I also recommend that you ask both parents to attend the interview if both parents will be involved in drop off and pick up. That way there are no surprises. I usually start the interview with a tour of the facility- the entire facility. That means that even if there are areas of your home that will never be used for child care, you still should show these areas to the parents. You want them to feel comfortable that your entire home is a safe, clean, and nurturing environment for their children. Specifically point out features in the areas used for child care, such as the eating area, the bathroom, nap areas, etc. Once the tour is over, take a few minutes to get the new children started playing with the others and sit down nearby with the parents. Start by going over the contract, since this is what brings out and answers the most questions. Discuss rates, hours of operation, schedules, meals, drop off and pick up, everything! Also review all other forms. Check to see if they have questions. Make sure you ask them about their typical drop off and pick up times so you can make sure they fit with your schedule. Also, be sure to provide the parents with a form to fill out about their child. Include areas for sleep habits, food or other allergies, medications needed, previous daycare experiences, fears, likes and dislikes, anything you need to know about this child to provide the best quality care. I would recommend spending at least 30 minutes talking with the parents while observing the kids playing. If you see behavior issues in this time, discuss them right away. If the parents are ready to sign the documents when you are done talking and you also think this would be a good match, make sure you reiterate that all children are accepted into care on a two (or four) week trial basis. That means that if either party is unhappy with the arrangement in that time they can cancel immediately without penalty. This gives everyone a little breathing room.
Being a child care provider is the ultimate in customer service positions. You spend long hours each day dealing with children and the people who care the most about them, their parents. You need to conduct an initial interview for the sake of everyone involved. Better to be safe than sorry!
Monday, March 31, 2008
Tax Tip Number Six
Hi Everyone! Time for the next tax tip! This week's tip involves record keeping. One of the most important things you need to keep track of as a daycare provider is the income you earn. This not only affects your taxes, ubt it also affects the taxes of your daycare parents. As a licensed child care provider, you are supposed to keep a sign-in/sign-out book for your child care business. As the parents drop off their child each day they sign the child in, including the time of drop off. When they pick up their child each day, they sign the child out, including time of pick up. It is really important to have the parents put the times for drop off and pick up for two reasons. First of all it useful for you when calculating either how much they owe you or how much you made that year. Secondly, it is helpful if there is a dispute between you and the parent regarding how much is owed or whether a child attended care that day. Having said all of this, I strongly urge you to keep an additional log of hours and income. There are three reasons this is a good idea. First, you can compare the sign in book with your other record to make sure they both agree. Second, you have double records to show parents in case of a dispute. Third, you have double book keeping to show the IRS in case of an audit. My suggestion is to keep a calendar handy. I always kept one hanging on the refrigerator, but you can use a pocket calendar or a wall calendar. As parents drop off each day, take a second (that is all it will take) to put down the drop off time. Do the same thing as parents pick up each day. Then if there are discrepancies between the sign in book and your records, you will be sure that your calendar is accurate and should go by that. Finally, I recommend giving parents a receipt each time they pay you. I used a generic carbon receipt book (available almost anywhere)which gave me a copy to keep and a copy for parents. Most of my parents admitted that they threw away their receipts since I gave them tax records for the year, but I gave me one more way to keep track of my income. So I always had three ways to triple check my figures for my income for the year. It was also a great way to keep track of figures for families that may quit care before the end of the year. You will always be able to go back and check these record keeping devices for accurate tax figures. Happy record keeping!
Thursday, March 20, 2008
Tax Tip Number Five
Here is this week's tax tip! With the economic stimulus act that Congress has passed, there is a tax break in sight for small business owners that need to purchase equipment in 2008. For the 2008 year ONLY, all business equipment that will be purchased this year that will be a depreciable expense on your 2008 taxes will receive an ADDITIONAL 50% in depreciation! This means that you could save money on next year's taxes by purchasing equipment this year! Now, what kinds of equipment are we talking about. Well, any large ticket items that you purchase for your business will qualify. For example, computers, swingsets, large play equipment, new refrigerators or other appliances, more expensive lawn or yard care equipment, etc. These items are all used to benefit your home daycare and can be depreciable items on your 2008 taxes. So buy them and put them into use in 2008 and you might save money on next years taxes! For more information on financing options for more expensive pieces of equipment ($5000 or more) for business owners, visit my blog http://ezrbusinesssolutions.blogspot.com
Thursday, March 13, 2008
Tax Tip Number Four
Tax Tip Number Four
It's time for the next tax tip! This week's tip is about keeping a mileage log. If you haven't already started doing this...start now! As a daycare provider mileage was one of my largest tax deductions. Even if you don't take the children you care for anywhere, you still have plenty of mileage you can claim! How do you set up a mileage log? It's simple really. First, find a notebook and pen that you can keep in your car at all times. Make sure it is something small enough not to get in the way, but large enough to hold the info. You will want to make columns for the following items in your notebook: date, starting location, starting mileage (find this on your odometer), location travelled to, reason for travelling, ending mileage. If you don't want to keep track of starting and ending mileage, just set your trip odometer to zero before you start out and record the number of miles travelled. Remember to do this before you ever pull out of the driveway and as soon as you have reached your destination. Also, remember that you can count the mileage there and back, so double your mileage for each trip. Also, keep a record if you travel from one destination to another in a single trip. For example, if you leave home, travel to the bank, and then travel to the grocery store before going back home, you will need to calculate the mileage for all legs of your trip. Now, where can you travel and count the mileage as a business expense? Of course you can count any mileage travelled while daycare children are in the car. But you can also count mileage when you go to buy groceries for child care, supplies for your business, to deposit checks from parents, errands for your business, etc. You also can count any mileage travelled to either drop off or pick up daycare children from school or other locations. This may not seem like a lot, but it adds up quickly! For even more information on other deductions for home-based business owners, see this great guide! Click Here!
It's time for the next tax tip! This week's tip is about keeping a mileage log. If you haven't already started doing this...start now! As a daycare provider mileage was one of my largest tax deductions. Even if you don't take the children you care for anywhere, you still have plenty of mileage you can claim! How do you set up a mileage log? It's simple really. First, find a notebook and pen that you can keep in your car at all times. Make sure it is something small enough not to get in the way, but large enough to hold the info. You will want to make columns for the following items in your notebook: date, starting location, starting mileage (find this on your odometer), location travelled to, reason for travelling, ending mileage. If you don't want to keep track of starting and ending mileage, just set your trip odometer to zero before you start out and record the number of miles travelled. Remember to do this before you ever pull out of the driveway and as soon as you have reached your destination. Also, remember that you can count the mileage there and back, so double your mileage for each trip. Also, keep a record if you travel from one destination to another in a single trip. For example, if you leave home, travel to the bank, and then travel to the grocery store before going back home, you will need to calculate the mileage for all legs of your trip. Now, where can you travel and count the mileage as a business expense? Of course you can count any mileage travelled while daycare children are in the car. But you can also count mileage when you go to buy groceries for child care, supplies for your business, to deposit checks from parents, errands for your business, etc. You also can count any mileage travelled to either drop off or pick up daycare children from school or other locations. This may not seem like a lot, but it adds up quickly! For even more information on other deductions for home-based business owners, see this great guide! Click Here!
Tuesday, March 11, 2008
10 Tax Deductions Home Daycare Providers Miss
Most child care providers know they can deduct the cost of food and supplies for their business on their taxes. Some even know they can take a substantial mileage deduction. But many home daycare providers miss some large deductions that can really help trim your tax bill or increase your refund. This article deals with ten commonly missed deductions and how to apply them to your taxes.
I am sure you have diligently kept your receipts from last year and have added up your food costs. Did you also calculate the cost of your consumable supplies? Maybe not! Consumable supplies are the items used for your business that are, well, consumed and have to be purchased over and over again. Items like toilet paper, tissues, napkins, paper towels, dish soap, laundry soap, etc. fall into this category. All of these items are either used by the children in your care or are used more frequently because you have children in your care. And all of them are partially deductible on your taxes. If you buy these supplies strictly for child care and your family doesn’t use them, then these supplies are 100% deductible. However, most of us don’t separate out our toilet paper for daycare and family use. So, in order to find out how much you can deduct for these consumables, you need to apply the time/space formula to the total amount spent on these supplies in a year. The time/space formula calculates how much time you spent doing daycare in a year compared to the number of hours in a year, and also calculates the amount of space in your home that you use for your business. For a full description of the time/space formula, see my article “Important Tax Deductions for Home Daycare and Child Care Providers” on www.ezinearticles.com. Briefly, you need to calculate the number of hours you spent doing child care in a year. Then you need to divide that number by the number of actual hours in a year (8760) to come up with a percentage of time you spent providing child care in the year. Finally, you need to calculate the percentage of your home that you use for your business and multiply this percentage times the percentage of hours worked to get a final percentage. This final percentage is then multiplied by the amount spent on consumables in a year to come up with the dollar figure of how much you can claim as a business expense on the consumables you purchased. Here is a list of the most common consumables used, though you may come up with a lot of others depending on your situation: dish soap, laundry detergent, dryer sheets, all cleaning products, Ziploc bags, aluminum foil, Saran wrap, garbage bags, tissues, toilet paper, paper towels, baby wipes, hand soap, lotion, paper plates, paper cups, and air fresheners. There are many others that may apply to your home. Try to come up with an exhaustive list that applies to your situation.
This next grouping of deductions I will deal with together, as they are all related. These deductions deal with supplies and services for your home that you pay for. This includes utilities, garbage services, internet service, and more. Since these services benefit both your business and your family, they once again need to have the time/space formula applied to them in order to calculate your deduction. Use the figure that you calculated from above and multiply it times the total amount paid in a year for, say, your electric bills to come up with a deductible amount. Basically, any supply or service that is used to benefit your business can be at least partially deducted. Remember to include these items: electric bills, propane or natural gas, water bills, home security system fees, cable or satellite television, internet service (if you use the internet for your business for advertising or looking things up or email), and garbage and/or recycling pickup. All of these services are necessary for running a child care business and are therefore deductible. Just calculate the total amount spent in a year for a service and then multiply it by your time/space formula calculation to get a total deduction. List these out and give them to your accountant, it’s that easy!
There are occasionally times when you can deduct 100% of the cost of a service. This applies when a service is used exclusively for your business. For example, if you have a phone line that is only used for your child care business, then you can deduct 100% of the fees for that phone line. Also, if your child care is run out of a separate building from your home, say a converted garage, then you can probably figure out the electricity for just that building and deduct that cost at 100%. It is, of course, advantageous to be able to increase your deductions, so take advantage of this if you can.
The tenth and final deduction that is commonly missed is a deduction for work done on or services provided for your home. For example, did you have new gutters installed? That cost will be at least partially deductible. Did you have your carpets cleaned? Again, that is a deduction. Did you have a repairman come to fix the refrigerator? Take a deduction for that! Save all receipts for any work done so you can claim the deduction. You will need to speak with your accountant about how much you can deduct for services done, because it depends on the service how the deduction is taken. Things like refrigerator repair will probably be deducted based on the time/space formula. Carpet cleaning and other cleaning services may be 100% deductible. Things like home improvements may have the time/space formula applied or they may be depreciated, depending on the cost. These can be great deductions, it is just a little more difficult to know how to calculate the total deduction on these items and should probably be done with the help of an accountant.
These ten tax deductions are fairly simple to apply and can really bring a home daycare provider some much needed tax relief. It takes a little extra time to calculate these items, but it can definitely be worth it in the long run!
If you are doing your own taxes, or even if you are having an accountant do them for you, it is important to know which deductions you can take. For even more information on tax deductions for home-based businesses, check out this fantasic guide - it is well worth the money! Click Here!
I am sure you have diligently kept your receipts from last year and have added up your food costs. Did you also calculate the cost of your consumable supplies? Maybe not! Consumable supplies are the items used for your business that are, well, consumed and have to be purchased over and over again. Items like toilet paper, tissues, napkins, paper towels, dish soap, laundry soap, etc. fall into this category. All of these items are either used by the children in your care or are used more frequently because you have children in your care. And all of them are partially deductible on your taxes. If you buy these supplies strictly for child care and your family doesn’t use them, then these supplies are 100% deductible. However, most of us don’t separate out our toilet paper for daycare and family use. So, in order to find out how much you can deduct for these consumables, you need to apply the time/space formula to the total amount spent on these supplies in a year. The time/space formula calculates how much time you spent doing daycare in a year compared to the number of hours in a year, and also calculates the amount of space in your home that you use for your business. For a full description of the time/space formula, see my article “Important Tax Deductions for Home Daycare and Child Care Providers” on www.ezinearticles.com. Briefly, you need to calculate the number of hours you spent doing child care in a year. Then you need to divide that number by the number of actual hours in a year (8760) to come up with a percentage of time you spent providing child care in the year. Finally, you need to calculate the percentage of your home that you use for your business and multiply this percentage times the percentage of hours worked to get a final percentage. This final percentage is then multiplied by the amount spent on consumables in a year to come up with the dollar figure of how much you can claim as a business expense on the consumables you purchased. Here is a list of the most common consumables used, though you may come up with a lot of others depending on your situation: dish soap, laundry detergent, dryer sheets, all cleaning products, Ziploc bags, aluminum foil, Saran wrap, garbage bags, tissues, toilet paper, paper towels, baby wipes, hand soap, lotion, paper plates, paper cups, and air fresheners. There are many others that may apply to your home. Try to come up with an exhaustive list that applies to your situation.
This next grouping of deductions I will deal with together, as they are all related. These deductions deal with supplies and services for your home that you pay for. This includes utilities, garbage services, internet service, and more. Since these services benefit both your business and your family, they once again need to have the time/space formula applied to them in order to calculate your deduction. Use the figure that you calculated from above and multiply it times the total amount paid in a year for, say, your electric bills to come up with a deductible amount. Basically, any supply or service that is used to benefit your business can be at least partially deducted. Remember to include these items: electric bills, propane or natural gas, water bills, home security system fees, cable or satellite television, internet service (if you use the internet for your business for advertising or looking things up or email), and garbage and/or recycling pickup. All of these services are necessary for running a child care business and are therefore deductible. Just calculate the total amount spent in a year for a service and then multiply it by your time/space formula calculation to get a total deduction. List these out and give them to your accountant, it’s that easy!
There are occasionally times when you can deduct 100% of the cost of a service. This applies when a service is used exclusively for your business. For example, if you have a phone line that is only used for your child care business, then you can deduct 100% of the fees for that phone line. Also, if your child care is run out of a separate building from your home, say a converted garage, then you can probably figure out the electricity for just that building and deduct that cost at 100%. It is, of course, advantageous to be able to increase your deductions, so take advantage of this if you can.
The tenth and final deduction that is commonly missed is a deduction for work done on or services provided for your home. For example, did you have new gutters installed? That cost will be at least partially deductible. Did you have your carpets cleaned? Again, that is a deduction. Did you have a repairman come to fix the refrigerator? Take a deduction for that! Save all receipts for any work done so you can claim the deduction. You will need to speak with your accountant about how much you can deduct for services done, because it depends on the service how the deduction is taken. Things like refrigerator repair will probably be deducted based on the time/space formula. Carpet cleaning and other cleaning services may be 100% deductible. Things like home improvements may have the time/space formula applied or they may be depreciated, depending on the cost. These can be great deductions, it is just a little more difficult to know how to calculate the total deduction on these items and should probably be done with the help of an accountant.
These ten tax deductions are fairly simple to apply and can really bring a home daycare provider some much needed tax relief. It takes a little extra time to calculate these items, but it can definitely be worth it in the long run!
If you are doing your own taxes, or even if you are having an accountant do them for you, it is important to know which deductions you can take. For even more information on tax deductions for home-based businesses, check out this fantasic guide - it is well worth the money! Click Here!
Thursday, March 6, 2008
Tax Tip Number Three
Hello again! It is time for this week's tax tip for child care providers! I hope these tax tips have been helpful to you! This week I want to address business expenses, specifically expenses related to running a business out of your home. As a daycare provider you probably use a significant portion of your home in some way to support your child care business. Because of that you have a lot of deductions you can take on your business taxes that you may not have thought about. For examples, did you know that you can deduct a portion of your electric bills? Since a portion of your electricity is used to support your business, you can claim this portion as a business expense. You will need to apply the time/space formula to your total electric bill for the entire year in order to find out what percentage you can claim as a business expense. For more information on the time/space formula scroll down to my article regarding important tax deductions for child care providers. You can also deduct a portion of your natural gas or propane bills (or whatever you use to heat your house), your cable TV or satellite TV bills, your garbage service and/or recycling bills, and services performed on your home. All of these would again have to have the time/space formula applied to them in order to find out how much you can claim as a business expense. Also, if you use yor computer for child care, specifically your internet service, a portion of your internet service provider fees is also deductible. All of these expenses are increased because you have extra people in your home for child care, so all of these expenses can be partially deducted for your business. If you have a phone line that is specifically used for your business, that expense is 100% deductible. Take the time to gather some information on your utility bills, etc. and apply the time/space formula to them. Then pass that information along to your accountant. These savings can really add up! For more information on tax savings for small businesses, check out this great info! Click Here!
Thursday, February 28, 2008
Potty Training
One huge issue child care providers face is the battle of potty training the youngsters in our care. Everyone has their own ideas about the best method for potty training. This can lead to confusion for the child and frustration in you and the parents. My first recommendation is to communicate openly with parents regarding potty training. When you feel a child is ready to potty train request a meeting with the parents to discuss the issue. Sometimes the parents will approach you first. In either case, sit down with the parents and talk about both their expectations and yours. That way you are all on the same page getting started. Know what to look for in deciding if a child is ready to potty train. Are they interested in the potty? Do they ask questions about going potty? Do they want to sit on the toilet? Do they dislike having a wet or messy diaper? If most or all of these are exhibited by the child, you can probably get started with potty training. One note of caution: if the child becomes resistant to the training, you need to back off! If you keep pushing a child to potty train when he or she doesn't want to, it is going to be nearly impossible to train the child at this time. Remember that each child is different with potty training as they are with everything! One really good, down to earth guide to potty training that I have found is called "Potty Training in 1 to 3 Days". Now, I can't guarantee that this guide will bring about results in 1 to 3 days, but the tips and information in it are very good and truly can make potty training much easier! Check it out and good luck! Click Here!
Tuesday, February 26, 2008
Important Tax Deductions for Home Daycare and Child Care Providers
Important Tax Deductions for Home Daycare and Child Care Providers
It’s tax time – are you ready? Chances are, if you started a home based child care business in 2007 you are feeling very overwhelmed about your taxes. I know that feeling! I ran a home daycare for nine years and tax season can be intimidating! Whether you are having a professional complete your taxes or you are doing them yourself, there are several things you need to know to help the process go more smoothly.
First let’s talk about the issue of professional tax preparers versus doing it yourself. Which method is better? I personally have used both methods. The first year I needed to file taxes for my home child care business, I attended a workshop put on by a local community college that dealt specifically with taxes for child care businesses. It was extremely helpful. I would suggest asking around to find out if there is something like that available in your area. You can check with other daycare providers, local community colleges, or child care organizations to see if someone can point you in the right direction. After attending the seminar, I decided to do the taxes myself that first year. I felt like I had a pretty good handle on the situation and professional tax preparers can be costly. I was able to get help from the IRS through their website www.irs.gov, and over the phone (see website for phone numbers). It takes some patience to get through to them because sometimes the hold time is lengthy, but when you do get through the help is outstanding! That first year I did my taxes the old fashioned way…on paper! I completed them on paper for a couple of years actually. A few years into my daycare business I chose to have a professional complete my taxes, mostly because of some items to be addressed in our personal taxes that we weren’t sure how to handle. I was relieved to find out that I had been doing a pretty good job with my business taxes! The accountant was able to find a few more deductions that I hadn’t been claiming that proved to be very helpful. After that year, I chose to go back to doing my own taxes, but I decided to use one of the tax software programs. They turned out to be easier than I thought they would be and the online question center was very helpful. I loved that I was able to file my taxes electronically, which significantly reduced my wait time to receive my refund. I continued to complete my taxes using computer software for the duration of my child care business years. Personally, I think that you can successfully complete your business taxes yourself, especially using tax software, and save yourself significant money. It might be beneficial to have a professional do it the first year so you are certain that you are taking all of the deductions you should take. After that, you can look back on the first year taxes as you complete them yourself to ensure that you are completing them correctly.
What sort of deductions should you be claiming? One of the biggest deductions you should be logging is your mileage. This is actually one of the deductions that I wasn’t claiming until I had a professional complete my taxes. I found out that I had been missing out on a huge tax savings by not keeping track of my mileage. I didn’t fully understand what mileage I could claim for my child care business. I thought I could only claim mileage for field trips or training classes. How very wrong I was! A home daycare provider can claim mileage for ANY trip in which child care business is conducted. This means that every trip to the grocery store to buy food for daycare, every trip to buy art supplies or toys, every trip to the bank to deposit child care income, is a business trip and you should be keeping track of your mileage! Mileage is deductible from your home to the location and back again. That being said, you need to be honest with your mileage calculations. If in one day you first travel to the bank to deposit checks and then you head to the grocery store to buy food before heading home, you can’t count mileage from home to the bank and from home to the grocery store. You need to calculate mileage from home to the bank, from the bank to the grocery store, and from the grocery store to your home to be fair. Just to give you an example of how large a deduction mileage can be…I live in a rural area, so a trip to the grocery store and back for me is about 30 miles. The bank is even further. In an average year, I was able to claim approximately 10,000 miles for a deduction for my child care business! This comes out to be a $3000-$4000 deduction! I know you are wondering what to do if you make a trip to the grocery store to buy both food for your business and food for your family. Can you claim that mileage? Absolutely! You are still there conducting daycare business, so that mileage is deductible! I know your next question is, “I didn’t keep track of my mileage for 2007, so do I lose out on that deduction?” Not necessarily. One method I use to calculate mileage is the receipt method. I am sure that you have been saving your receipts from trips to the store. You need them for tax purposes anyway (see next paragraph). You need to go back through your receipts and create a mileage log based on them. Count up how many times you went to each store and write it up, including the name, address, and reason for going to each store. Then you will need to logon to a website such as www.mapquest.com and choose the option for finding directions. Put in your starting address (usually your home) and the address of the store you went to. Then click on find directions. When the program lists the driving directions, it will also list the mileage. You will need to double the mileage, since the program only gives you mileage for the trip to the location, not for the return trip. Once you have the roundtrip mileage for a certain store, multiply the mileage by the number of times you went to that store for daycare business in 2007. Voila…you have a mileage log! You will need to calculate the number of times you went to the bank for childcare also, and use the same method as above for calculating the mileage. If you don’t save all of your deposit receipts, go back through your checkbook registers to find all of your deposits. Remember to include things like field trip mileage, or trips back and forth from the school if you pick up child care children from preschool or kindergarten. Using this method will give you a fairly accurate calculation of your mileage and can provide you with a huge tax deduction!
Another deduction that you should be claiming is the cost of food and supplies for child care. This is another huge tax deduction! There are two ways to handle food for child care. You can either shop separately for your daycare food than for food for your family, or you can shop for both at the same time and separate items for daycare later on your receipt. Personally, I didn’t shop separately for two reasons. First, if you shop for food that is to be used for your home daycare business, then that food can ONLY be used for your home child care business! That means that if your son or daughter wants to take a granola bar to school for snack and you purchased those for daycare, you are going to have to say no. I know that sounds extreme, but if you are claiming those items as strictly child care items, you need to keep them separated from food for your family. Secondly, it is really a pain in the neck to do separate shopping for your family and your business! It means either separate trips to the store, or at least separate shopping carts in the store! The advantage to shopping separately is that you can claim every penny spent on food for child care on your taxes. I chose to shop for my family and my business together and not to keep the food separated. It made things a lot easier in my house. However, it did make my record keeping for my business a little trickier. Once a month I had to go through my grocery receipts and mark off items that I knew were not used for child care, such as coffee or soda pop. Once I had eliminated those items from my receipt total, I then had to calculate which items on the receipt were food items, which were consumable items (like toilet paper) and which were non-consumable (like toys). I then calculated a total amount for that receipt of each of these categories and wrote it at the top of the receipt. Come tax time, I calculated a total amount spent for the year for each of these categories. Then, in order to fairly calculate a deduction for each of these categories based on how much was used for child care and how much was used for my family, I had to apply the time-space formula to each category. The time-space formula is an invaluable equation that allows you to fairly claim child care expenses based on how many hours out of the year you spend being a daycare provider. The equation is fairly simple. First, you need to calculate the approximate amount of space in your home that you use for your child care business. You need to include every space that is ever used for daycare. You need to include your primary child care room of course and your kitchen. But you also need to include the bathrooms that the kids use, the dining area if they eat or do crafts there, the laundry room since you will invariably be washing blankets, sheets, towels, etc. that were used for daycare, any rooms in which children nap, your home office if you use it to create forms and file business paperwork, and any other place the kids use. You need to exclude any rooms that the children in your care never use. Be fair in calculating the approximate percentage of your home that is used in your business. Once you have this percentage, you need to figure out the approximate number of hours you spent in 2007 performing duties related to your business. You, of course, need to figure out the number of hours per day that you actually care for children. You also need to take into consideration the approximate amount of time per day that you spend cleaning up from child care or getting ready for child care. Then you need to figure out exactly how many days you provided these services in 2007. You then multiply the number of hours per day by the number of days you provided care. That gives you the number of hours you spent in your business in 2007. Now you need to figure out the percentage of hours you spent in your business compared to the number of hours in a year. There are 8760 hours in a year. So, take the number of hours you spent doing daycare and divide it by 8760 and this will give you the percentage of time you spent doing child care in 2007. Finally, you need to multiply the percentage of time you spent doing daycare by the percentage of your home used for business to find a final percentage that you can claim for costs shared by your business and your family. This gives you your time-space percentage. Here is an example: Let’s say you decide that you use 80% of your home for your business. Now, you spend on average 10 hours per day on your business and you calculate that you spent 200 days being a child care provider in 2007. Multiply the 10 hours per day by the 200 days (10 X 200), to find that you spent 2000 hours providing child care services in 2007. Since there were a total of 8760 hours available in 2007, you will now divide your 2000 hours by 8760 hours (2000 divided by 8760) to find that you spent about 22.8% of your time being a daycare provider in 2007. You can round that up to 23%. For your final calculation, you need to multiply the amount of space used in your home by the amount of time spent doing daycare to find a final percentage that you can claim. In this case, you would multiply the percent usage of your home (80%) by the percent of time spent (23%) (80% X 23%) to get a final percentage of 18.4% or 18% since we would round down. This is the percentage of food, consumable items, utilities, and mortgage interest you will be able to claim for your child care business. The calculation takes a few minutes, but it saves a lot of headache in the end. Non-consumable items like toys or cookware are 100% deductible for your business.
If you have a professional complete your taxes, you will want to make sure to have all of your information with you at the initial meeting. This will save you from having to get information to him/her later and can actually save you money in tax preparation fees. My accountant charged me less because she had less work to do since I had done most of the information preparation done before I met with her. You will want to bring a sheet that shows the total amount of income for your business for 2007, a calculation of your time-space formula, a list of expenses (include a note about which ones should be multiplied by the time-space formula), a mileage log, and any other information relevant to the business (such as a tax id if you have one). Be prepared to back up all of this information with receipts if your accountant wants to see them. Don’t stress if you don’t have everything the accountant wants. You can get it to them later if necessary. If you don’t have everything in order the accountant will let you know, but it will cost you more since the accountant will have to spend more time in preparing your taxes. Be as prepared as you can and you will have much better, and cheaper, results!
This is just the tip of the iceberg when it comes to tax preparation for home child care businesses. This seems like an overwhelming amount of information, but there is actually a lot more. Don’t give up yet. There are a lot of resources for you to get more information, such as the IRS, an accountant, or a local organization. The best advice I can give a home daycare provider is to be incredibly organized. Keep all of your receipts, keep an accurate mileage log, keep an accurate receipt book recording income, and keep all of it readily available. If you follow this advice filing your taxes will be much easier!
To help you keep track of all of these records, check out this great daycare software! Click Here! Remember to check back here weekly for more tax tips for daycare providers!
It’s tax time – are you ready? Chances are, if you started a home based child care business in 2007 you are feeling very overwhelmed about your taxes. I know that feeling! I ran a home daycare for nine years and tax season can be intimidating! Whether you are having a professional complete your taxes or you are doing them yourself, there are several things you need to know to help the process go more smoothly.
First let’s talk about the issue of professional tax preparers versus doing it yourself. Which method is better? I personally have used both methods. The first year I needed to file taxes for my home child care business, I attended a workshop put on by a local community college that dealt specifically with taxes for child care businesses. It was extremely helpful. I would suggest asking around to find out if there is something like that available in your area. You can check with other daycare providers, local community colleges, or child care organizations to see if someone can point you in the right direction. After attending the seminar, I decided to do the taxes myself that first year. I felt like I had a pretty good handle on the situation and professional tax preparers can be costly. I was able to get help from the IRS through their website www.irs.gov, and over the phone (see website for phone numbers). It takes some patience to get through to them because sometimes the hold time is lengthy, but when you do get through the help is outstanding! That first year I did my taxes the old fashioned way…on paper! I completed them on paper for a couple of years actually. A few years into my daycare business I chose to have a professional complete my taxes, mostly because of some items to be addressed in our personal taxes that we weren’t sure how to handle. I was relieved to find out that I had been doing a pretty good job with my business taxes! The accountant was able to find a few more deductions that I hadn’t been claiming that proved to be very helpful. After that year, I chose to go back to doing my own taxes, but I decided to use one of the tax software programs. They turned out to be easier than I thought they would be and the online question center was very helpful. I loved that I was able to file my taxes electronically, which significantly reduced my wait time to receive my refund. I continued to complete my taxes using computer software for the duration of my child care business years. Personally, I think that you can successfully complete your business taxes yourself, especially using tax software, and save yourself significant money. It might be beneficial to have a professional do it the first year so you are certain that you are taking all of the deductions you should take. After that, you can look back on the first year taxes as you complete them yourself to ensure that you are completing them correctly.
What sort of deductions should you be claiming? One of the biggest deductions you should be logging is your mileage. This is actually one of the deductions that I wasn’t claiming until I had a professional complete my taxes. I found out that I had been missing out on a huge tax savings by not keeping track of my mileage. I didn’t fully understand what mileage I could claim for my child care business. I thought I could only claim mileage for field trips or training classes. How very wrong I was! A home daycare provider can claim mileage for ANY trip in which child care business is conducted. This means that every trip to the grocery store to buy food for daycare, every trip to buy art supplies or toys, every trip to the bank to deposit child care income, is a business trip and you should be keeping track of your mileage! Mileage is deductible from your home to the location and back again. That being said, you need to be honest with your mileage calculations. If in one day you first travel to the bank to deposit checks and then you head to the grocery store to buy food before heading home, you can’t count mileage from home to the bank and from home to the grocery store. You need to calculate mileage from home to the bank, from the bank to the grocery store, and from the grocery store to your home to be fair. Just to give you an example of how large a deduction mileage can be…I live in a rural area, so a trip to the grocery store and back for me is about 30 miles. The bank is even further. In an average year, I was able to claim approximately 10,000 miles for a deduction for my child care business! This comes out to be a $3000-$4000 deduction! I know you are wondering what to do if you make a trip to the grocery store to buy both food for your business and food for your family. Can you claim that mileage? Absolutely! You are still there conducting daycare business, so that mileage is deductible! I know your next question is, “I didn’t keep track of my mileage for 2007, so do I lose out on that deduction?” Not necessarily. One method I use to calculate mileage is the receipt method. I am sure that you have been saving your receipts from trips to the store. You need them for tax purposes anyway (see next paragraph). You need to go back through your receipts and create a mileage log based on them. Count up how many times you went to each store and write it up, including the name, address, and reason for going to each store. Then you will need to logon to a website such as www.mapquest.com and choose the option for finding directions. Put in your starting address (usually your home) and the address of the store you went to. Then click on find directions. When the program lists the driving directions, it will also list the mileage. You will need to double the mileage, since the program only gives you mileage for the trip to the location, not for the return trip. Once you have the roundtrip mileage for a certain store, multiply the mileage by the number of times you went to that store for daycare business in 2007. Voila…you have a mileage log! You will need to calculate the number of times you went to the bank for childcare also, and use the same method as above for calculating the mileage. If you don’t save all of your deposit receipts, go back through your checkbook registers to find all of your deposits. Remember to include things like field trip mileage, or trips back and forth from the school if you pick up child care children from preschool or kindergarten. Using this method will give you a fairly accurate calculation of your mileage and can provide you with a huge tax deduction!
Another deduction that you should be claiming is the cost of food and supplies for child care. This is another huge tax deduction! There are two ways to handle food for child care. You can either shop separately for your daycare food than for food for your family, or you can shop for both at the same time and separate items for daycare later on your receipt. Personally, I didn’t shop separately for two reasons. First, if you shop for food that is to be used for your home daycare business, then that food can ONLY be used for your home child care business! That means that if your son or daughter wants to take a granola bar to school for snack and you purchased those for daycare, you are going to have to say no. I know that sounds extreme, but if you are claiming those items as strictly child care items, you need to keep them separated from food for your family. Secondly, it is really a pain in the neck to do separate shopping for your family and your business! It means either separate trips to the store, or at least separate shopping carts in the store! The advantage to shopping separately is that you can claim every penny spent on food for child care on your taxes. I chose to shop for my family and my business together and not to keep the food separated. It made things a lot easier in my house. However, it did make my record keeping for my business a little trickier. Once a month I had to go through my grocery receipts and mark off items that I knew were not used for child care, such as coffee or soda pop. Once I had eliminated those items from my receipt total, I then had to calculate which items on the receipt were food items, which were consumable items (like toilet paper) and which were non-consumable (like toys). I then calculated a total amount for that receipt of each of these categories and wrote it at the top of the receipt. Come tax time, I calculated a total amount spent for the year for each of these categories. Then, in order to fairly calculate a deduction for each of these categories based on how much was used for child care and how much was used for my family, I had to apply the time-space formula to each category. The time-space formula is an invaluable equation that allows you to fairly claim child care expenses based on how many hours out of the year you spend being a daycare provider. The equation is fairly simple. First, you need to calculate the approximate amount of space in your home that you use for your child care business. You need to include every space that is ever used for daycare. You need to include your primary child care room of course and your kitchen. But you also need to include the bathrooms that the kids use, the dining area if they eat or do crafts there, the laundry room since you will invariably be washing blankets, sheets, towels, etc. that were used for daycare, any rooms in which children nap, your home office if you use it to create forms and file business paperwork, and any other place the kids use. You need to exclude any rooms that the children in your care never use. Be fair in calculating the approximate percentage of your home that is used in your business. Once you have this percentage, you need to figure out the approximate number of hours you spent in 2007 performing duties related to your business. You, of course, need to figure out the number of hours per day that you actually care for children. You also need to take into consideration the approximate amount of time per day that you spend cleaning up from child care or getting ready for child care. Then you need to figure out exactly how many days you provided these services in 2007. You then multiply the number of hours per day by the number of days you provided care. That gives you the number of hours you spent in your business in 2007. Now you need to figure out the percentage of hours you spent in your business compared to the number of hours in a year. There are 8760 hours in a year. So, take the number of hours you spent doing daycare and divide it by 8760 and this will give you the percentage of time you spent doing child care in 2007. Finally, you need to multiply the percentage of time you spent doing daycare by the percentage of your home used for business to find a final percentage that you can claim for costs shared by your business and your family. This gives you your time-space percentage. Here is an example: Let’s say you decide that you use 80% of your home for your business. Now, you spend on average 10 hours per day on your business and you calculate that you spent 200 days being a child care provider in 2007. Multiply the 10 hours per day by the 200 days (10 X 200), to find that you spent 2000 hours providing child care services in 2007. Since there were a total of 8760 hours available in 2007, you will now divide your 2000 hours by 8760 hours (2000 divided by 8760) to find that you spent about 22.8% of your time being a daycare provider in 2007. You can round that up to 23%. For your final calculation, you need to multiply the amount of space used in your home by the amount of time spent doing daycare to find a final percentage that you can claim. In this case, you would multiply the percent usage of your home (80%) by the percent of time spent (23%) (80% X 23%) to get a final percentage of 18.4% or 18% since we would round down. This is the percentage of food, consumable items, utilities, and mortgage interest you will be able to claim for your child care business. The calculation takes a few minutes, but it saves a lot of headache in the end. Non-consumable items like toys or cookware are 100% deductible for your business.
If you have a professional complete your taxes, you will want to make sure to have all of your information with you at the initial meeting. This will save you from having to get information to him/her later and can actually save you money in tax preparation fees. My accountant charged me less because she had less work to do since I had done most of the information preparation done before I met with her. You will want to bring a sheet that shows the total amount of income for your business for 2007, a calculation of your time-space formula, a list of expenses (include a note about which ones should be multiplied by the time-space formula), a mileage log, and any other information relevant to the business (such as a tax id if you have one). Be prepared to back up all of this information with receipts if your accountant wants to see them. Don’t stress if you don’t have everything the accountant wants. You can get it to them later if necessary. If you don’t have everything in order the accountant will let you know, but it will cost you more since the accountant will have to spend more time in preparing your taxes. Be as prepared as you can and you will have much better, and cheaper, results!
This is just the tip of the iceberg when it comes to tax preparation for home child care businesses. This seems like an overwhelming amount of information, but there is actually a lot more. Don’t give up yet. There are a lot of resources for you to get more information, such as the IRS, an accountant, or a local organization. The best advice I can give a home daycare provider is to be incredibly organized. Keep all of your receipts, keep an accurate mileage log, keep an accurate receipt book recording income, and keep all of it readily available. If you follow this advice filing your taxes will be much easier!
To help you keep track of all of these records, check out this great daycare software! Click Here! Remember to check back here weekly for more tax tips for daycare providers!
Tax Tip Number Two
It is time for tax tip number two! My tax tip for this week is about how to report daycare totals to parents. You are required by law to furnish each family with a report that shows how much they paid you in child care expenses for a year. You also need to supply each family with your legal name, your business name if you have one, your address, your phone number, and your tax ID number or social security number, whichever you are using. The easiest way I have found to do this is to provide each family with a W-10. This is an IRS form that you can download from the website www.irs.gov. Once you get onto the website, use the search function and type in w-10. It will only pull up one option. Click on the W-10 and download it. Then you can print it out. This form is used to supply your information to your families. However, it does not include a place to put the amount paid to you. What I did was to modify the form. This form does not have to be filed with a family's taxes, so it is ok if it is not an original form and it is ok to change the format. I looked at the form W-10 and made my own version using my word processing program. I made sure my version contained all of the information required on the original form. Then, instead of including the lengthy directions included at the bottom of the original form, I created a section that listed the name of the family I was supplying the form to, the children's names, the family's address and phone number, the amount charged to them for daycare that year, and the amount they paid for daycare that year. Then I printed out multiple copies of my new form and filled one out for each family. Don't forget to provide these forms to the families of ALL of the children you cared for in that year, including families that may have left you earlier in the year. Refer to your receipt book to make sure you include all families and to calculate totals. I always included a short letter with each form letting the parents know what the form was and that they did not need to file the actual form with their taxes. Rather they should keep it with a copy of their taxes to reference in the future if needed. My parents loved receiving an official form that contained all of the information they needed for their taxes!
Monday, February 25, 2008
Setting Daycare Hours
One thing that can really make or break your home child care business is your hours of operation. There are two things to consider when establishing a schedule: your family's schedule and the needs of your clients. First and foremost you need to consider the schedule of your family. Do you need to take kids to school or pick kids up from school? Do your children have after school activities that you need to get them to or attend? If so, you will need to consider how to do this with daycare kids around. You will either need to really limit your daycare hours, or you will need to bring the child care kids with you on these errands. Also take into consideration your children's homework and your family's dinnertime. You need to be able to create as normal of a life as possible for your family while still running your business. The second consideration is the needs of your clients. I live in a rural community and most of my daycare parents had to travel 40+ miles to get to work. Therefore, I needed to open my business early (at 6:30 am) and close my business a little later (at 6:00 p.m.) to accomodate travel time. If you live in a city, chances are that most parents work fairly close by and you may be able to get by with shorter hours. But consider that parents work all sorts of jobs, some with weird hours, and you need to decide which ones you can accomodate. It is a tough juggling act, but with a little planning and research you will make the right choice. For more information on this subject, check ezine.com in a few days for my new article about daycare hours.
Wednesday, February 20, 2008
Tax Tip for Home Child Care Providers
Tax time can be stressful for home daycare providers, because there is so much information to gather. I will be publishing one tax tip each week through April 15, to try to make this process as painless as possible. Also, look for my new article, "Important Tax Deductions for Home Daycare and Child Care Providers" to be published in the next couple of days on EZineArticles.com. It contains a detailed look at two important tax deductions that you definitely need to claim as a child care provider.
My tax tip for this week is to organize your receipts by month. Before I became a child care provider I didn't save my receipts unless I had paid by credit card or there was a possibility that I might need to return something. I certainly never saved my grocery receipts. But I received good advice from another provider when I got started - NEVER throw away a store receipt! I began by just stuffing all of my receipts into a large envelope and never looked at them again until tax time. While this works, it makes tax time very time consuming! I recommend creating an envelope for each month. As you get receipts just put them in the correct envelope. Then, at the end of each month, take 30 minutes and tally the receipts for that month.
Write the totals on the front of each envelope. (For category suggestions and how to tally receipts, see the above mentioned article.) If you keep up with this process tax time will be a breeze! If you want to be even more organized with your receipts, check out this cool daycare management software! Click Here! Remember to check back here weekly for more tax tips for daycare providers!
My tax tip for this week is to organize your receipts by month. Before I became a child care provider I didn't save my receipts unless I had paid by credit card or there was a possibility that I might need to return something. I certainly never saved my grocery receipts. But I received good advice from another provider when I got started - NEVER throw away a store receipt! I began by just stuffing all of my receipts into a large envelope and never looked at them again until tax time. While this works, it makes tax time very time consuming! I recommend creating an envelope for each month. As you get receipts just put them in the correct envelope. Then, at the end of each month, take 30 minutes and tally the receipts for that month.
Write the totals on the front of each envelope. (For category suggestions and how to tally receipts, see the above mentioned article.) If you keep up with this process tax time will be a breeze! If you want to be even more organized with your receipts, check out this cool daycare management software! Click Here! Remember to check back here weekly for more tax tips for daycare providers!
Thursday, February 14, 2008
Craft Projects to do with Little Ones
One of the best things to do on a cold or wet day is to pull out the craft basket and make something fun! Kids absolutely love crafts and they actually learn a lot from making things. They learn cooperation and sharing and they work on fine and gross motor skills. They also get to use the creative half of their brain and they are allowed to express themselves however they want. Parents love these craft projects too, because they know their children are doing more than just sitting around all day and it gives them something to display at home. But let's face it, not all of us can pull a craft project out of our hats a couple of times a month! Since I am a former elementary school teacher, I had many craft project books from my teaching days. There are many good ones out there that have easy to make ideas that don't require a lot of supplies. One of my favorites is Craft Projects for Little Kids. It has projects tailored to little ones that are easy to make, cute, and inexpensive. Check out the link below to find out more information, or visit your local book store to find a resource that is right for you! Have fun!
Click Here!
Click Here!
Monday, February 11, 2008
Top Four Things You Shouldn't Do When Starting or Running a Home Daycare Business
I’m sure this sounds like an unusual title! But there are several things that you should know that you shouldn’t do when starting and running a home daycare. I ran a very successful home childcare business for nine years, so these tips come from the voice of experience!
The first “don’t” of home daycare is don’t take on every family that calls looking for care for their children. I know is it tempting when you are first starting or you have a vacancy that you really need to fill to accept children from any and every call that comes in. What you need to remember is that you will have to spend many hours a day with these children and you will have to deal with the parents on a daily basis. You absolutely must have a face-to-face interview with every family (including children) before you agree to take them on. This will allow you to get a feel for the children’s behavior and the personality of the parents. If you have reservations after meeting them, you should probably turn them down so it doesn’t lead to a difficult situation later on. It is necessary to actually like and enjoy the children and families you work with in order to run a successful home daycare.
The second thing you should NOT do in starting and running your childcare business is do not allow parents to run the show! This is your business and you are in charge. If you let them some parents will try to dictate everything from your daily schedule to the format of your contract! Only you can decide how to best structure your business and you need to be firm with parents about this. It is certainly going to happen (trust me) that parents will make special requests. It is up to you to decide which ones to honor and which to refuse. Don’t worry about losing clients because you can’t or won’t honor a request they have made. The way you run your business should complement your personality, lifestyle, and the needs of your family. So you need to make business decisions with those things in mind. If a parent chooses to go elsewhere for care because you can’t or won’t honor a special request, then it is probably best that they do.
A Third no-no in running a successful childcare business is structuring every minute of the day. Most children come to daycare looking to have fun. I have found that the children prefer large chunks of time set aside for unstructured playtime. They want to be able to choose which toys to use and what activity to do. The best thing for you to do is provide them with a wide variety of activities and toys and allow them to make choices of what to do and when. I am not saying that you shouldn’t have a daily schedule. You need to provide a consistent schedule so children know what to expect. But within that schedule allow at least a couple of large time chunks for unstructured playtime.
The final thing you shouldn’t do is you should NOT let your home daycare run your life. This is very important! If you are able, it is best to have a designated daycare area. That leaves the rest of your house to be, well, your home. If you can’t designate a daycare area, you need to be firm with the children you care for regarding rules for clean-up and areas in which they are allowed to play. If you have children of your own it is essential that they don’t feel that everything of theirs is also used for daycare. Let your children choose a few special items that cannot be used by the daycare. Also, make sure your daycare children clean up everything before they go. Otherwise you and your family spend your family time doing daycare clean-up. Be firm with parents regarding pickup time and write a stiff financial penalty into your contract for late pickup. You need to end your daycare day at the same time each day, just like you would in a 9-5 job. Don’t let daycare take over your home or your family time.
Home childcare can be a rewarding profession or it can be a nightmare. By keeping in mind and following through with these four ways NOT to run a home daycare, it is much more likely that you will create a successful and fulfilling business.
The first “don’t” of home daycare is don’t take on every family that calls looking for care for their children. I know is it tempting when you are first starting or you have a vacancy that you really need to fill to accept children from any and every call that comes in. What you need to remember is that you will have to spend many hours a day with these children and you will have to deal with the parents on a daily basis. You absolutely must have a face-to-face interview with every family (including children) before you agree to take them on. This will allow you to get a feel for the children’s behavior and the personality of the parents. If you have reservations after meeting them, you should probably turn them down so it doesn’t lead to a difficult situation later on. It is necessary to actually like and enjoy the children and families you work with in order to run a successful home daycare.
The second thing you should NOT do in starting and running your childcare business is do not allow parents to run the show! This is your business and you are in charge. If you let them some parents will try to dictate everything from your daily schedule to the format of your contract! Only you can decide how to best structure your business and you need to be firm with parents about this. It is certainly going to happen (trust me) that parents will make special requests. It is up to you to decide which ones to honor and which to refuse. Don’t worry about losing clients because you can’t or won’t honor a request they have made. The way you run your business should complement your personality, lifestyle, and the needs of your family. So you need to make business decisions with those things in mind. If a parent chooses to go elsewhere for care because you can’t or won’t honor a special request, then it is probably best that they do.
A Third no-no in running a successful childcare business is structuring every minute of the day. Most children come to daycare looking to have fun. I have found that the children prefer large chunks of time set aside for unstructured playtime. They want to be able to choose which toys to use and what activity to do. The best thing for you to do is provide them with a wide variety of activities and toys and allow them to make choices of what to do and when. I am not saying that you shouldn’t have a daily schedule. You need to provide a consistent schedule so children know what to expect. But within that schedule allow at least a couple of large time chunks for unstructured playtime.
The final thing you shouldn’t do is you should NOT let your home daycare run your life. This is very important! If you are able, it is best to have a designated daycare area. That leaves the rest of your house to be, well, your home. If you can’t designate a daycare area, you need to be firm with the children you care for regarding rules for clean-up and areas in which they are allowed to play. If you have children of your own it is essential that they don’t feel that everything of theirs is also used for daycare. Let your children choose a few special items that cannot be used by the daycare. Also, make sure your daycare children clean up everything before they go. Otherwise you and your family spend your family time doing daycare clean-up. Be firm with parents regarding pickup time and write a stiff financial penalty into your contract for late pickup. You need to end your daycare day at the same time each day, just like you would in a 9-5 job. Don’t let daycare take over your home or your family time.
Home childcare can be a rewarding profession or it can be a nightmare. By keeping in mind and following through with these four ways NOT to run a home daycare, it is much more likely that you will create a successful and fulfilling business.
Getting Your Childcare License Increases Your Cash Flow
Many people feel that getting a daycare or childcare license is not necessary for childcare providers. Legally you only need a license if you are going to care for children from more than one family. It’s true that going through the process of obtaining your daycare license can be time consuming and sometimes stressful. However, the truth is that obtaining your childcare license can actually help you make more money! There are three ways that a daycare license increases your cash flow. They are: 1. Charging higher rates and bringing in new clients; 2. Income from food programs; and 3. Grant money.
Let’s take a closer look at item #1. Charging higher rates and bringing in new clients. Parents searching for childcare look at both quality of care and cost of care when making a decision. Believe it or not, childcare rates can vary greatly even in the same geographical location. So it pays for parents to shop around. However, most parents are willing to pay a little more for childcare if they know the quality of care will be outstanding. Obtaining your childcare license shows your dedication to top quality care. Also, many parents aren’t willing to place their child in an unlicensed childcare because there are no inspections done and no one is monitoring the childcare provider. So having your license can actually help your bring in more business!
The second way a daycare license helps increase cash flow is from income through the food programs. Food programs are systems set up to help educate childcare providers on serving healthy snacks and lunches to the children they care for. As a provider you must submit a monthly menu of what you serve for monitoring. It takes a little more work, but you are actually reimbursed a portion of the cost for each meal and snack you serve! These reimbursements aren’t huge but they certainly help defray the cost of feeding multiple children several times a day. These food programs are only available to licensed providers and they can certainly increase your cash flow!
Finally, getting your daycare license allows you to apply for the many grants that are available for home daycare providers. There are a lot of grants out there from local, state and federal government as well as from private sources. Some grants stipulate how the money is to be used; for example for play equipment, books, or facility improvements. Other grants are more open-ended and allow you to use the funds however they are needed for your childcare business. These grant monies are like pennies from Heaven and can really help financially! But these grants are only available to licensed childcare providers!
As you can see, getting your childcare license can really help boost your business financially. Even though the licensing process may be cumbersome, it can really “pay off” in the end!
Let’s take a closer look at item #1. Charging higher rates and bringing in new clients. Parents searching for childcare look at both quality of care and cost of care when making a decision. Believe it or not, childcare rates can vary greatly even in the same geographical location. So it pays for parents to shop around. However, most parents are willing to pay a little more for childcare if they know the quality of care will be outstanding. Obtaining your childcare license shows your dedication to top quality care. Also, many parents aren’t willing to place their child in an unlicensed childcare because there are no inspections done and no one is monitoring the childcare provider. So having your license can actually help your bring in more business!
The second way a daycare license helps increase cash flow is from income through the food programs. Food programs are systems set up to help educate childcare providers on serving healthy snacks and lunches to the children they care for. As a provider you must submit a monthly menu of what you serve for monitoring. It takes a little more work, but you are actually reimbursed a portion of the cost for each meal and snack you serve! These reimbursements aren’t huge but they certainly help defray the cost of feeding multiple children several times a day. These food programs are only available to licensed providers and they can certainly increase your cash flow!
Finally, getting your daycare license allows you to apply for the many grants that are available for home daycare providers. There are a lot of grants out there from local, state and federal government as well as from private sources. Some grants stipulate how the money is to be used; for example for play equipment, books, or facility improvements. Other grants are more open-ended and allow you to use the funds however they are needed for your childcare business. These grant monies are like pennies from Heaven and can really help financially! But these grants are only available to licensed childcare providers!
As you can see, getting your childcare license can really help boost your business financially. Even though the licensing process may be cumbersome, it can really “pay off” in the end!
Thursday, February 7, 2008
Subscribe to my feed.
Hello everyone! Just wanted to remind you (in case you are new to blogging) that you can scroll to the bottom of the page and choose the option to subscribe to this feed. What that means is that each time a new update is posted on this site it will automatically be sent to your computer so you don't have to keep checking back. It is quick and easy and will save you a lot of valuable time!
Childcare Information Management
Managing all of the information for a childcare business can be a real headache! I used to keep paper files on all of my kiddos that contained contracts, enrollment forms, medical forms, immunization records, emergency forms, and on and on! When you add in information like the food programs and tax records it can be a nightmare! I have finally found a daycare management software that I love and that truly made my life easier when it came to record keeping. It allowed me to store most of my information electronically, saving me lots of space! It also allowed me to easily make changes to contact information, etc. without requiring new forms each time. That saved me a lot of time and hassle! One caution about storing information electronically, ALWAYS MAKE A BACKUP COPY OF YOUR DATA! That way in case of computer problems you don't lose all of your data! Also, you should really keep relevant contact information at your immediate fingertips, so if you arene't a person that has your computer on and ready all day you may want to keep a list of contact information either with your calendar or with your sign-in book so you have it ready in a moment's notice. I highly recommend this daycare management software and I'm sure you will find it as useful as I have! Just click the link below to check it out! Good luck!
Click Here!>
Click Here!>
Plan a Party Day!
Hello everyone! One thing I loved to do with the children in my care was to plan a party day. The kids loved the change of pace and so did I! Check out this link below to find a fantastic party planning package that can help with party games for all ages! I love this product and I am sure you will too!
Click Here!
Click Here!
Wednesday, February 6, 2008
Welcome!
Welcome to my blog! My name is Eileen Michalczyk. I am the mother of four gifted children, a former elementary school teacher, and a former home daycare owner. I currently run a successful marketing business from my home. I have a wealth of knowledge to share with you on how to run a successful home daycare. I personally opened my home childcare business in 1998 and just closed my doors in the summer of 2007. Home daycare allowed me to be at home with my own children while still making an income. It can be a great profession if you structure it correctly and carefully and remember that you are in charge! Keep coming back to visit as new content will be added regularly, and look for my web-published articles. Links will be available for them soon! I also have an e-book in the works that will be a complete guide to running a successful home childcare and will come with a complete kit of the forms you will need to get started. Check back on this blog in the next few weeks for a date of publication. Best of luck!
Eileen Michalczyk
Eileen Michalczyk
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